JULY 10, 2026
CMS Administrator Oz Says Some States Have Embedded Medicaid Fraud Into Program Design, Singles Out California
Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services (CMS), said in an interview with Fox News Digital that Medicaid fraud has become a "feature" rather than a flaw in some states' program design. Oz singled out California Gov. Gavin Newsom, saying Newsom was warned by his own state auditors four years ago about widespread fraud but took only "performative" steps. The Trump administration subsequently withheld more than $1.3 billion in California's Medicaid reimbursements, according to Fox News.
CMS Administrator Mehmet Oz, in an interview published by Fox News Digital, described a theory in which certain states — primarily those led by Democratic governors — have structured Medicaid-funded care programs to function as an economic engine, routing federal reimbursement dollars to workers who would otherwise be unemployed and collecting state taxes on those wages.
"I began to realize that stealing money from Medicaid is not a flaw for a lot of states, it's a feature of the program," Oz said, using the phrase "Medicaid-ing it" to describe what he depicted as a deliberate pattern. He further argued that the arrangement creates a political benefit for Democrats, because the workers involved can be organized into unions whose dues flow into political action committees.
Oz specifically named Newsom, saying the California governor "was told by his own auditors that there was such widespread fraud in California that they had to take action" roughly four years ago, but that the state's response amounted to performative steps rather than substantive reform. Fox News reported the Trump administration has withheld more than $1.3 billion in California Medicaid reimbursements as a consequence.